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EBay sells enterprise unit ahead of PayPal split

Thu, Jul 16, 2015 - 10:10 PM

E-commerce company eBay Inc said it was selling its enterprise business to a consortium led by private equity firm Permira for US$925 million, as it streamlines its operations ahead of the separation from PayPal Holdings Inc.

PHOTO: AFP

[SAN FRANCISCO] E-commerce company eBay Inc said it was selling its enterprise business to a consortium led by private equity firm Permira for US$925 million, as it streamlines its operations ahead of the separation from PayPal Holdings Inc.

Shares of eBay, which also reported a better-than-expected quarterly profit and boosted its share buyback plan by $1 billion, rose as much as 5 per cent in early trading. PayPal was up 4.5 per cent on a "when issued" basis.

The deal leaves eBay with its slow-growing marketplace business, which faces stiff competition from rivals such as Amazon.com Inc.

Analysts, however, were bullish on eBay's prospects as a standalone company. "Ebay will not grow nearly as fast as PayPal but it is a very profitable business that generates tremendous amount of cash - some of which they will be able to return to shareholders," Wedbush Securities analyst Gil Luria told Reuters.

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EBay's enterprise business, the company's smallest, was formerly known as GSI Commerce. The business, which eBay purchased in 2011 for $2.4 billion, helps retailers strengthen their online presence and e-commerce capabilities.